Question

In: Operations Management

Historical demand for a product is: DEMAND January 20 February 19 March 23 April 20 May...

Historical demand for a product is:

DEMAND

January 20

February 19

March 23

April 20

May 24

June 23

a. Using a weighted moving average with weights of 0.40 (June), 0.40 (May), and 0.20 (April), find the July forecast. (Round your answer to 1 decimal place.) July forecast

b. Using a simple three-month moving average, find the July forecast. (Round your answer to 1 decimal place.) July forecast

c. Using single exponential smoothing with ? = 0.30 and a June forecast = 14, find the July forecast. (Round your answer to 1 decimal place.) July forecast

d. Using simple linear regression analysis, calculate the regression equation for the preceding demand data. (Do not round intermediate calculations. Round your intercept value to 1 decimal place and slope value to 2 decimal places.) Y = + t

e. Using the regression equation in d, calculate the forecast for July. (Do not round intermediate calculations. Round your answer to 1 decimal place.) July forecast

Solutions

Expert Solution

Weighted moving average for July

= 0.40 x Demand for June + 0.4 x demand for May + 0.2 x demand for April

= 0.40 x 23 + 0.40 x 24 + 0.2 x 20

= 9.2 + 9.6 + 4

= 22.8

Forecast for July using 3 month moving average

= ( Demand April + Demand May + Demand June) /3

= ( 20 + 24 + 23 ) / 3

= 22.33

Forecast for July using exponential smoothing

= 0.30 x Demand June + ( 1 – 0.30) x Forecast June

= 0.3 x 23 + 0.7 x 14

= 6.9 + 9.8

= 16.7

Let Y = a + b.t

Where,

Y ( Dependent variable ) = Forecasted demand

T = serial number of month ( e.g January = 1 , February = 2 , March = 3 , April = 4 , May = 5 , June = 6 etc )

We place all the data of month and demand in 2 adjacent columns excel and apply the formula LINEST ( ) to arrive at values of A and B.

Accordingly values of A and B are :

A = 18.8

B = 0.77

Therefore , Regression equation :

Y = 18.8 + 0.77.t

Forecast for July ( i.e. t = 7 ) will be

= 18.8 + 0.77x7

= 18.8 + 5.39

= 24.19

keosha answered 11 months ago

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